UK telco Vodafone has acquired the 67 per cent stake of Hutchison Telecom International in Indian mobile company Hutchison Essar. The enterprise value of Hutch Essar is $18.8 billion. So Vodafone will pay $11.1 billion to HTIL for the 67 per cent stake. Vodafone will assume net debt of approximately $2.0 billion. As of now, it looks like Essar will remain the minority partner with 33 per cent. Vodafone, however, said that it would make an offer to buy Essar’s stake at the equivalent price per share it has agreed with HTIL.
Vodafone also said in a statement that it will sell 5.6 per cent stake in Indian telco Bharti Airtel back to promoters for $1.6 billion. it will retain the remaining 4.4 per cent stake as financial investment. More importantly, Vodafone and Bharti have reached an infrastructure sharing agreement.
The transaction is expected to close in the second quarter of calendar year 2007 and is conditional on Indian regulatory approval. In the race for Hutch, Vodafone has beaten players like Reliance Communications, the Hindujas (along with Russia’s Altimo and Qatar Telecom), and Essar itself.